IMF To Consider Boosting Precautionary Financing: Lagarde

Imf policy
International Monetary Fund Managing Director Christine Lagarde said on Thursday that low oil and commodities prices would continue for some time, and the Fund will consider strengthening and broadening its array of precautionary financing instruments.In a speech at the University of Maryland, Lagarde said that advanced economies should take steps to support growth through accommodative monetary policy and infrastructure spending, while emerging economies can help by boosting non-commodity revenues and allowing more flexible exchange rate policies. Lagarde said that the implementation of new voting reforms that have boosted the influence of emerging markets like China and Brazil have doubled the Fund’s permanent resources. She said that the rebalancing of China’s economy from exports and investment to domestic consumption and services would lead to more sustainable growth. “In the short run, however, it will lead to slower growth, and this slowdown creates spillover effects — through trade and lower demand for commodities, and amplified by financial markets.”

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